For a certain slice of Twitter users, the tweet confirmed their suspicions about management students at elite universities, and, by proxy, about corporate leaders at large. For business school faculty and administrators, the tweet produced a collective groan as it resurfaced a plutocratic image they are eager to banish. (For the record, the average annual US wage is about $53,000.)

“The reason that story is so resonant is because it lines up with people’s erroneous, pre-existing beliefs about the kinds of people who are MBA types,” said Kerwin Charles, dean of the Yale School of Management (SOM). “That they are kind of unfeeling, ‘let me get rich, I don’t care about the world, I’m already privileged’ types.”

The truth, Charles said, “is that MBA know more and care more in general than they are given credit for.”

As recently as 20 years ago, Charles’ claim about the altruism of business students might have seemed fanciful. For many, the MBA was a conduit to unlocking wealth, and the mission of the institution was teaching students to enhance shareholder value. Broader societal concerns were an afterthought, if they were thought about at all.

But over the last two decades, there’s been a shift in how both schools and students talk about their purpose. While some of that is clearly an effort to improve the tarnished brand of business education, there has been tangible change, too.

MBA programs have become less homogenous, more international, and more willing to challenge the primacy of markets. Ideally, their graduates emerge more comfortable with diverse perspectives, more empathetic, and more nuanced in their thinking, too.

The evolution of business schools mirrors larger cultural shifts. Like much of the corporate world, business schools now champion diversity and emphasize their responsibility to a broad range of stakeholders, including their employees, their communities, and to the planet.

The transformation is far from complete. Black and Hispanic enrollment at US business schools lags their share of the population. The cost of attendance at elite institutions is astronomical—at Harvard Business School, two years can cost $225,000, not counting the earnings lost while in school—forcing graduates into lucrative jobs that allow them to pay off loans but may not serve the best interests of the student or society. And ultimately, business schools serve to support and reinforce a capitalist structure that perpetuates inequality and threatens the environment.

For the most part, business schools still serve to refresh the ranks of executives for the corporate world. But if the institutions succeed in living up to their ambitions, their graduates will be more thoughtful about the power they will wield.

“Our students are going to go to Wall Street and crush it there,” Charles said. “But in the crushing of it, the SOM student will be mindful of the impact of her actions, the deal she doesn’t close, the plan she buys, etc. on stakeholders, broadly construed.”

The shifting priorities of business students

The shifting emphasis in management education reflects in part the priorities of the millennials that make up the bulk of most MBA classes. Like all good businesses, the institutions have adjusted to the market.

It’s also been prompted in part by a growing awareness of the role of business—and by default, business schools—in cataclysmic events, like the financial crisis of 2008 and the threat of climate change.

“I don’t think anyone would disagree that business can be perceived as a force for evil or a force for good,” said Lee Newman, dean of IE Business School in Madrid. “We can be the polluters and sweatshops, or we can be the agents of change. Business schools are all pivoting to this idea that we have this responsibility.”

The schools have largely made that transition without alienating their most important constituents: the employers that hire MBAs and whose generous starting salaries entice many young men and women to enroll in business schools in the first place.

EY, the accounting and consulting firm formerly known as Ernst & Young, hires about 340 MBA in the US annually, and that number is going up, said Kristina Liphardt, who heads campus recruiting for graduate schools at EY. Part of the appeal of hiring MBAs is the work experience they earned before enrolling in business schools, she said, but that doesn’t mean the time spent in school doesn’t have value either.

“The schools are doing a really good job of preparing MBAs to take on the major changes that are disrupting the economy,” she said.

At McKinsey & Co., the consulting firm, the percentage of MBAs it hires has shrunk—they will make up about 20% of its 7,000 new hires this year—but in some ways the MBA students are more critical than ever, said Inga Maurer, a partner who co-leads North American recruiting. That’s because as the firm recruits more graduates with non-business degrees in areas like analytics and machine learning, it relies on their MBAs to knit their skills and different viewpoints together into successful teams.

“What the MBA is doing very well is teaching people to solve complex problems in a group of people,” Maurer said. ”There is a lot of power in the orchestration of diverse points of view.”

It’s not just the MBA

While the MBA remains the flagship program at most US business schools, it’s increasingly just one of a more diverse range of offerings. Universities are offering specialized masters’ degrees tailored to both business sectors, like in healthcare administration, and business functions, like in data analytics. Even MBAs have become fragmented: There are part-time, executive, and, at some institutions, online MBAs.

“The future of management education is not the future of the MBA and it should never have been,” said David Schmittlein, dean of the Sloan School of Management at the Massachusetts Institute of Technology. “Management education should never have been all about the MBA.”

He equates the MBA to a prix-fixe meal. Sometimes you have the appetite and budget for a multi-course feast, but most diners prefer to order à la carte.

Thirty or 40 years ago, the MBA dominated business education, with too many students stuffed into programs that didn’t necessarily suit them, all learning from the same case method pioneered at Harvard Business School, Schmittlein said. Now, students can customize their business education with a range of degrees and at schools with distinct approaches to what and how they teach.

“In those earlier times, case-based debating was the coin of the realm, whether you liked it or not,” he said. “Now what Wharton is doing is quite different than what Harvard is doing is quite different from what Chicago is doing is quite different from what MIT Sloan is doing.”

Business education has also evolved from the teaching of knowledge to the teaching of the skills needed to harness that knowledge, Schmittlein said. It’s no longer sufficient to tell students the four skills leaders need and hope they’ll be able to use them when they’re managers—schools need to coach them and put students into situations where they can to practice them.

The next evolution in business education

The nurturing and development of skills like leadership is the necessary next step in management education, said Newman of IE. Once thought of as soft skills, Neman calls them “deep skills” and business schools provide unusually fertile environments to work on them.

“How often does one have the chance to take a year off to be with hundreds of people from all over the world with different business skills, from different cultures, with different languages? It is a mixture that can be an amazing catalyst for growth,” he said. “We need to take advantage of that context.”

Just as managers have an obligation to the planet and society, they have an obligation to the people they work with, he said.

“If you are a manager that came out of business school and you’re sending employees home stressed and frustrated, they are getting divorced, they are absent parents, then we have failed you as a business professional,” he said.

In the past, the development of these behavioral skills was either shrugged off or assumed to be acquired by osmosis. But students today come primed to learn them, he said.

The growing appreciation of the need to develop communication and other interpersonal skills has also pushed business schools to diversify their learning environments. That could mean sending students as far as away as another continent or simply having them work with local businesses. Getting students out of their comfort zone and into multi-cultural experiences has proven benefits for leaders (pdf), Schmittlein said.

Business schools also need to concentrate not just on exposing their students to cultural diversity, but income diversity as well, Yale’s Charles said. Students graduating from top MBA programs will become some of the highest earners in the country, and will likely work and socialize with people who earn as much as them, he said.

“It’s pointless to pretend that our graduates are going to leave and join the bottom 30% of the American earnings distribution. They’re not,” he said. “I think about how the privilege they receive from this education will shut them out from persons whose wellbeing they might genuinely care about. We’ve got to think about how to connect them to the world that I believe they care about.”

Likewise, Charles said, the incredible cost of attendance is shutting out large chunks of the  population from attending business school, particularly people of color.

Maurer at McKinsey echoes those concerns, and urges business schools not to drop the ball on their commitment to diversity.

“We would like to see more diverse profiles,” he said. “Not just racial or gender. It’s not one layer, it’s taking a real holistic view on diversity and configuring learning teams and case protagonists to bring diversity into every aspect.”

Despite the attempts to change, business schools ultimately run the risk of reverting to previous ways of doing things once their stakeholders—be it students, faculty or donors—are no longer as insistent on change. Will health inequality still be a priority after covid is solved? Or will the need for diversity still be as sharply felt once George Floyd’s death is years in the past? Charles asked. “There is the danger of efforts fading once attention recedes.”

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